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Citigroup’s board saw the writing on the wall months ago, but did little to stop the world’s largest bank from crashing and taking the rest of Wall Street with it.

A handful of Citigroup’s highly paid directors did take a few timid baby steps last summer to find a replacement for then-chief Chuck Prince, but backed down almost as soon as they had embarked on their quiet coup, according to a source familiar with the matter.

As Citigroup’s turmoil deepened yesterday, stocks of Wall Street’s top seven banks tanked – with five of them hitting new 52-week lows and wiping out nearly $17 billion in stock value – pushing the blame game wider across the economic landscape.

Governance experts said the brunt of the blame for Citigroup’s problems and turmoil rests with its 13 directors, excluding Prince, who collectively earned $43.8 million in compensation last year.

“Directors are not like some kind of 1950s housewife who was always the last to learn about the misadventures of her husband,” said J. Richard Findlay, head of The Centre for Corporate & Public Governance.

“Their job is to oversee the CEO and to be aware of key events in strategy and risk at every stage along the way,” Findlay added.

Sandler O’Neill analyst Jeff Harte said, “Public comments in support of Mr. Prince and recent management changes made by Mr. Prince suggest that the board was as surprised as anyone by [Citi’s] CDO related exposures.”

Insiders said some directors had been anticipating carnage from its junk mortgages as far back as the summer of 2006, with the board’s risk-management panel holding more sessions than any other committee in that year and in early 2007.

But before the risk panel or board ever made its fears public, insiders began selling their shares, according to regulatory filings.

Robert Rubin – the board’s key director who was named the chairman Sunday – unloaded the most stock. He sold $4.5 million worth of shares on Jan. 24, 2007, at $55.05 before shares collapsed.

Two other senior executives also sold shares as the woes in the credit markets began gathering momentum in August 2006.

Chief Operating Officer Robert Druskin sold $1.8 million worth of shares between August 2006 and January 2007 as the stock traded in the $54 range.

Win Bischoff, the head of European operations who was just named temporary CEO, sold $2.5 million worth of his shares between August 2006 and February 2007 as the stock traded in the low $50 range.

Governance critics said Citigroup’s high-profile directors, including Time Warner CEO Richard Parsons, didn’t do justice to their reputations when they stopped short of naming a permanent CEO to replace Prince.

“The market hates uncertainty and I think people were looking for the board to do something rather than announce a hunt for someone to lead the ship,” said one Wall Street veteran.

The board’s fumbles could trigger a flood of lawsuits by irate investors who’ve lost billions in Citigroup’s failed bets on the junk mortgage bubble.

Rubin said yesterday, “Ever since the board became aware of the [subprime] problem, the board has been engaged” in working to resolve it.

Activist investors along the lines of Carl Icahn could also jump in and push Citi to break itself up.

The rating agencies that gave Citigroup and others passing grades on their junk paper are also under scrutiny by regulators and Congress.

Citigroup shares skidded 4.9 percent to $35.90 in a selling rout that wiped out billions in market value.

Meanwhile, Citigroup faces an uphill search for a permanent CEO to help rescue the big bank.

After Citi warned yesterday that it could take write-downs of as much as $11 billion, it said that it would look both internally and externally for candidates, which suggests that Vikram Pandit, head of the firm’s investment bank and alternative investments unit, could be on the short list.

But complicating the search is the fact that Merrill Lynch, which ousted CEO Stan O’Neal last week, is also looking for its own chief amid giant losses from the credit crunch.

John Thain, now head of NYSE Euronext, has been mentioned as a candidate but has told people close to him that he is not interested in running either Merrill or Citi. Former Citi boss Sandy Weill told CNBC yesterday that he isn’t interested in rejoining as head of his former firm.

“In terms of leadership – this will not be an easy fix, even for the best of managers,” said Credit Suisse analyst Susan Roth Katzke. zachery.kouwe@nypost.com